It seems pulled from the pages of a mystery story, but you may have heard it in the headlines recently. What happens if you win the lottery but die mysteriously shortly after?
Urooj Khan may have gotten lucky when he hit the jackpot for $1 million in the Illinois Lottery, but shortly after things took a terrible turn. Khan died this past July, days before he was set to collect $425,000 in lottery winnings. It first looked like a tragic yet unsuspecting death from natural causes, but after concern from his brother over the unfortunate timing, more tests on Khan’s body revealed that the actual cause of death was cyanide poisoning.
Unfortunately, for his loved ones, he died without a Will in place, deeming a court battle inevitable. Khan’s widow, Shabana Ansari, and his siblings fought for months over his estate, including his lottery winnings.
Ansari has produced documents alleging that the majority of Khan’s estate is rightfully hers. Ansari’s attorney, Al-Haroon Husain, asserts that two months earlier Khan signed the document giving his portion of his business to his wife in the case of his death. According to ABC News, the 38-page document appears to be an agreement between Khan and his business partner in a dry cleaning business. The document includes a clause that states: “Members shall transfer their interest to their respective spouse upon member’s death.”
While Husain claims that the clause was only discovered after the court asked for an inventory of the estate, Khan’s brother Imtiaz questions his brother’s logic in The Chicago Sun-Times: “Why would he [sign an agreement] to transfer everything to his wife? Did he know that he was going to die? Did he know [someone] was going to kill him?”
Husain responded to Imtiaz’ inquiries, “He can question it as much as he wants… Mr. Khan and his business partner signed off on it. It’s the operating agreement for their company. He may not like it but fortunately, the law is the law.”
Khan’s brother also filed a petition with a judge in January, asking Citibank to release information about Khan’s assets to make certain that Khan’s minor daughter from a previous relationship is taken care of by Khan’s estate.
This court battle and confusion over Khan’s intentions could have been avoided if he had an estate plan in place at the time of his death.
For lottery winners, estate planning is a must. While it sounds morbid, especially in the face of all of the excitement that comes with winning the lottery, one of the first things a lottery winner should do is create or review his or her Will and establish an estate plan.
In the unfortunate circumstances of a lottery winner’s death, as we can see with the Khan case, the prize money may be distributed in ways that are not in line with the winner’s wishes. Estate taxes should also be considered, as well as an Irrevocable Life Insurance Trust, which will assist in the payment of estate taxes on the winnings in the case of death.
Consulting an estate planning lawyer is an important way to ensure the appropriate measures are taken with newly acquired winnings. An estate plan can also plan for the future of minor children, providing that money will be distributed upon reaching milestones (i.e. attending college) or a certain age.
The Chicago Sun-Times has since reported that Khan’s estate, predominantly tied up in the dry cleaning business, will go to his wife. The lottery winnings will be split between his widow and his daughter. Whether this is what Khan would have wanted will remain a mystery and a cautionary tale to future lottery winners to institute an estate plan.